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What Is Severance Pay? Severance pay is the compensation and/or benefits an employer provides to an employee after employment is over. Severance packages may include extended benefits, such as health insurance and outplacement assistance to help an employee secure a new position. It is given under Industrial Disputes Act,1947 if a worker is employed for a period of 248 days. Employers offer packages to employees who are laid off, whose jobs are eliminated because of downsizing, or who
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